Introduction

1.1 Leave entitlements and obligations for Australian Government employees and employers are established in workplace relations legislation including the: Fair Work Act 2009 (Fair Work Act); Long Service Leave (Commonwealth Employees) Act 1976; Maternity Leave (Commonwealth Employees) Act 1973; Paid Parental Leave Act 2010; and related regulations.

1.2 The Australian Public Service Enterprise Award 2015, entity specific enterprise agreements established under Part 2-4 of the Fair Work Act, and entity policies provide additional obligations on Australian Public Service (APS) employers and employees in relation to leave.^{1 2}

1.3 Human resource financial processes encompass the day-to-day management and administration of employee benefits including payroll and other entitlements, such as leave.

1.4 Employee benefits (including wages and salaries, superannuation, leave, separation and redundancies) represent the highest value departmental expenditure for most Australian Government entities, and the inputs and estimates that contribute to the measurement of the associated liability are subject to management judgement. In 2020–21, leave and other entitlements represented $3.0 billion (5.5 per cent) of Australian Government employee benefits expenses ($54.8 billion), and $11.1 billion (2.5 per cent) of Australian Government employee benefits liabilities ($447.5 billion) as at 30 June 2021.

1.5 The Public Governance, Performance and Accountability Act 2013 (PGPA Act) sets out that the accountable authority must govern the entity in a way that ‘promotes the proper use and management of public resources for which the authority is responsible’³ and that accountable authorities must establish and maintain appropriate systems of risk oversight and management, and appropriate systems of internal control.

1.6 The PGPA Act also states that the accountable authority must act in a way that is ‘not inconsistent with the policies of the Australian Government’. The government’s workplace bargaining policy states that entities are responsible for ensuring that workplace arrangements are consistent with the policy, meet all legislative obligations, and that entities are responsible for ensuring that their workplace relations policies and practices are consistent with the policy.

1.7 The establishment and implementation of policies that align with legislative, award and enterprise agreement requirements support good practice in the administration of staff leave and assist entities to communicate entitlements and obligations to employees and delegates.

Selected entities

1.8 Entities were selected from those that engage employees under the Public Service Act 1999 and provide a broad cross-section of government entities based on size (small, medium and large) and function (policy, service delivery and regulation). Table 1.1 includes employee and financial statistics for each entity and sets out a combined average staffing level of 56,588 employees across all 10 entities, accounting for 37 per cent of the total APS workforce in 2020–21.

Table 1.1: Audit entities average staffing levels and employee leave benefits and provisions

Note a: Finance reporting includes both departmental ($14.7 million employee benefits expense and $65.8 million employee provisions) and administered ($17.4 million employee benefits expense and $50.5 million employee provisions) elements. Administered employee benefits and provisions relate to employees engaged under the Members of Parliament (Staff) Act 1984.

Source: Entity annual reports and portfolio budget statements.

Rationale for undertaking the audit

1.9 The increase in findings relating to human resource management and administration across Australian Government entities during the period from 2015–16 to 2018–19, and the significance of these as a proportion of all financial statements audit findings prompted the ANAO to undertake procedures relating to the management of staff leave in three entities. This was performed as part of the 2019–20 financial statements audits of the Department of Home Affairs, the Department of Prime Minister and Cabinet and the Department of the Treasury.

1.10 Analysis in these three financial statements audits identified weaknesses in processes relating to staff leave and associated monitoring controls. The reporting on the three entities indicated their systems did not facilitate the identification of: rates of non-compliance with entity policies; weaknesses in monitoring controls and reporting; and patterns of attendance and leave that, if identified and addressed, may result in higher levels of attendance. This resulted in poor outcomes for the three entities from that intended by the related policies.

1.11 This audit will provide assurance to the Parliament about the extent to which entities are complying with legislative, award, enterprise agreement and policy requirements relating to staff leave.

Audit approach

Audit objective, criteria and scope

1.12 The objective of the audit was to assess the compliance by selected Australian Public Service entities with legislation and other relevant requirements relating to staff leave.

1.13 To form a conclusion against the audit objective, the ANAO adopted the following high-level criteria:

• Have the entities established policies for the administration of leave types that align with the relevant legislation, award and enterprise agreement provisions?
• Did the entities comply with the legislation, award, enterprise agreement, and policy requirements in the administration of leave types?

Audit methodology

1.14 The audit methodology included:

• examination of relevant legislation, awards, enterprise agreements and entity policies relating to the administration of the following leave entitlements:
  • annual and purchased leave;
  • long service leave;
  • maternity and parental leave;
  • personal (and carer’s) leave; and
  • APS level flexible leave and Executive Level time off in lieu.
• meetings with entity staff responsible for the administration of staff leave;
• analysis of entity data and sample testing of individual leave balances and transactions including leave approvals and supporting documentation; and
• testing of entity information system controls used for the administration of leave.

Data integrity

1.15 The Australian Government’s information management standard sets out requirements for the maintenance of government business information including that entities create, save or capture business information into systems with sufficient functionality to satisfy operational and other stakeholder needs for reliable and trusted information.

1.16 The ANAO tested the reliability and completeness of entity data for all types of leave within the scope of this audit and found that for eight of 10 entities leave data was reliable and complete. Issues were identified with missing records and incomplete approval date fields provided to the ANAO by Finance; and incomplete data for AHL for all types of leave, where 26% of leave transactions had no approval data available.

1.17 Services Australia is the provider of a number of services for NDIA, including a shared human resources management information system (HRMIS). For the purpose of determining timeliness of leave approvals, the ANAO requested the system field that identifies the date an instance of leave was approved. The configuration of Services Australia and NDIA’s HRMIS resulted in the ANAO being unable to obtain detailed approval data for some leave transactions as their HRMIS records the date a leave transaction was last actioned and substitutes for the approval date where subsequent adjustments occur. This limits the ability to accurately monitor compliance with leave requirements through systems based reporting, where the date of approval is a necessary data point for analysis.

1.18 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $660,000.

1.19 The team members for the audit were Pooja Bajaj, Alexander Aird, Michael Commens, Benjamin Webb and Colin Bienke.

2.1 Workplace relations legislation, the Australian Public Service Enterprise Award 2015 (the award) and entity enterprise agreements establish annual and purchased leave entitlements and obligations for Australian Government public service employers and employees under the Public Service Act 1999.

2.2 To assess entity compliance with annual and purchased leave provisions the ANAO examined whether entities:

• developed and implemented policies for the administration of annual and purchased leave that align with legislative, award and enterprise agreement provisions;
• complied with legislative, award, enterprise agreement, and policy requirements in the administration of annual and purchased leave; and
• established appropriate management reporting on the use and administration of staff leave.

Have entities established policies for the administration of annual and purchased leave that align with relevant legislation, award and enterprise agreement provisions?

2.3 Section 87 of the Fair Work Act 2009 and section 16 of the Australian Public Service Enterprise Award 2015 establish annual leave entitlements. As provided for by the National Employment Standards (NES), which are defined within the Fair Work Act 2009, an employee (other than an irregular or intermittent employee) is entitled to four weeks of paid annual leave for each year of service. An employee on annual leave will, for the period of the annual leave, be paid at the employee’s ordinary hourly rate.

2.4 Enterprise agreements and determinations covering all entities include an entitlement to four weeks of paid annual leave consistent with the award and NES. End of year shutdown leave, encompassing the period between 25 December and 1 January, is granted to employees in eight entities and specified in agreements and determinations.⁴ The number of days granted for the end of year shutdown is not specified in agreements, however this is three business days. Services Australia’s employees covered by the agreement are entitled to an additional three days of annual leave in lieu of end of year shutdown leave.

2.5 Enterprise agreements also specify annual leave balances and purchased leave entitlements as shown in Table 2.1.

Policies, and procedures for administering annual leave entitlements

2.6 Entities should establish fit-for-purpose policies for the administration of leave entitlements that support compliance with legislation, relevant awards, entity enterprise agreements, and the government’s information management standards.⁵

2.7 Nine entities developed policies for the administration of annual leave consistent with legislation, award and enterprise agreement requirements. AHL has not established policies for the management of staff leave. Table 2.1 sets out annual and purchased leave entitlements, and obligations relating to the approval of leave for all 10 entities.

Table 2.1: Entity annual and purchase leave entitlements and administrative arrangements

Note a: Annual leave entitlement is for full-time equivalent staff. Pro-rata entitlements exist for part-time employees.

Note b: Leave plans for managing employee leave where annual leave balances exceed the threshold are to be agreed prior to the balance exceeding the threshold. Leave plan requirements are set out in entity policies for all entities except for AHL.

Source: ANAO analysis of entity enterprise agreements and leave policies between 1 July 2020 and 31 October 2021.

Did entities comply with legislative, award, enterprise agreement, and policy requirements in the administration of annual and purchased leave?

Annual leave accruals and balances

2.11 Section 16 of the Australian Public Service Enterprise Award 2015 and entity enterprise agreements set out that annual leave accrues at the rate of 20 days each year for all entities except Services Australia with its enterprise agreement stating that ‘A full time employee will accrue 23 days (172.5 hours) of annual leave for each full year of service’.⁶

2.12 The ANAO has obtained assurance over the accurate accrual and financial reporting of annual leave balances through:

• IT general and application controls testing that is complemented by employee benefits controls and substantive testing for the eight entities where this is the related financial statements audit approach; and
• substantive testing of employee benefits transactions and balances for the remaining two entities, ACIC and AHL.

2.13 Results of the 2020–21 financial statement audits of the 10 entities concluded that there were no material adverse audit findings relating to employee leave transactions and balances, including annual leave.

2.14 As shown in Table 2.1, employees at all 10 entities have entitlements to accrue annual leave and obligations to manage annual leave balances in accordance with enterprise agreements. Four entities (AHL, Finance, MDBA and NIAA) have explicit clauses requiring the employee and employer to manage annual leave balances exceeding thresholds.⁷

2.15 The ANAO analysed all employee annual leave balances between 1 July 2020 and 31 October 2021 to determine the number of employees exceeding the annual leave threshold specified in entity enterprise agreements. ANAO observed that all 10 entities had employees that exceeded enterprise agreement thresholds for annual leave. The rate of employees exceeding the threshold at the four entities with an explicit compliance requirement ranged from 15 per cent at AHL to 21 per cent at Finance.⁸ Additional detail is included in Appendix 3.

2.16 Figure 2.1 shows the rate of employees at each entity exceeding the annual leave threshold set out in enterprise agreements.

Figure 2.1: Percentage of employees exceeding entity annual leave threshold

Note: Percentage of employee leave balances exceeding the threshold calculated using the total number of employees for each entity

Source: ANAO analysis of entity leave data between 1 July 2020 and 31 October 2021.

2.17 All entities except AHL have enterprise agreement clauses and/or policies for the management of excess annual leave balances. These typically require entities to develop plans in consultation with employees to manage excessive annual leave balances. For example, Finance’s annual leave policy states that when accrued annual leave exceeds 40 days, a manager must work with the employee to develop an agreed strategy to reduce the leave to 40 days or below within a 12-month period.

2.18 The ANAO observed that a combined 223 employees across all entities had leave balances greater than 75 days with the highest annual leave balance observed in entity data equivalent to 241 days of annual leave or more than six times the annual leave balance specified in the entity’s enterprise agreement.

2.19 Some entities advised that the COVID-19 pandemic impacted the management of excessive leave balances including the development of staff leave plans. For example, MDBA advised the ANAO that between 28 July 2020 and 9 December 2021, MDBA did not direct staff with leave balances greater than 40 days to take leave.

Timeliness of approval of annual and purchased leave taken

2.20 The Australian Public Service Commission defines scheduled leave by detailing the leave types that comprise unscheduled absences. Personal, carers and miscellaneous leave (bereavement, compassionate and emergency leave) are identified as unscheduled absences.

2.21 To facilitate appropriate resourcing of operational requirements and the efficient use of resources, entity policies should require that annual and purchased leave is approved in advance of being taken, and the circumstances where there may be exceptions to this. This is consistent with the Australian Public Service Commission’s classification of these types of leave as schedulable.

2.22 As shown in Table 2.1, six of 10 entities have requirements in enterprise agreements and/or policy which requires the prior approval of annual leave, for example:

• ATO’s enterprise agreement states that ‘where leave is planned, approval must be gained prior to the employee’s absence’ from duty;
• MDBA’s enterprise agreement states that annual leave requires prior approval except in exceptional circumstances⁹;
• NDIA’s enterprise agreement states that generally, you must obtain prior approval for annual, purchased, long service or flex leave or give notice of the taking of unplanned leave, as soon as practicable, including notice of the duration, or expected duration, of the leave; and
• NIAA’s leave policy states employees must obtain prior approval for all leave through the relevant approval process before the leave is taken.

2.23 There may be instances where it would be appropriate for annual and other scheduled/planned leave to be approved following commencement. These include when:

• an employee accesses annual leave in lieu of personal leave, where personal leave entitlements have been exhausted;
• employees or managers move to another role, breaking reporting lines prior to the approval of leave; or
• an approver goes on unplanned leave prior to approving employee leave.

2.24 Existing system limitations may also result in the loss of original approval data where leave applications are amended after approval for personal leave taken during periods of leave.

2.25 The ANAO applied a threshold of 10 per cent to its analysis of leave commencing prior to approval. Only Services Australia (see Table 2.3) has a rate of annual leave commencing prior to approval below 10 per cent. The ANAO’s analysis of entity records identified rates of non-compliance for all six entities with explicit requirements to have annual and purchased leave approved prior to commencement.

Table 2.2: Entity rates of non-compliance with annual and purchased leave approval requirements

Note a: Figures indicate the percentage of total leave transactions approved after commencement of leave. Rates of non-compliance set out in the table are the rates observed in entity data. The ANAO has not applied the 10% threshold discussed at paragraph 2.25 to its calculation.

Note b: MDBA does not have a requirement in its enterprise agreement or policy for the prior approval of purchased leave.

Source: ANAO analysis of entity leave approval data between 1 July 2020 and 31 October 2021.

2.26 The ANAO also analysed leave approval records for the four entities without an explicit requirement for prior approval of annual and purchased leave. ANAO analysis of entity leave approval data between 1 July 2020 and 31 October 2021 is included in Table 2.3.

Table 2.3: Entities without an explicit requirement for the prior approval of annual and purchased leave

Note a: Figures indicate the percentage of total leave transactions approved after commencement of leave.

Source: ANAO analysis of entity leave approval data between 1 July 2020 and 31 October 2021.

2.27 Figure 2.2 shows the distribution in days taken to approve annual leave following the commencement of that leave. The figure indicates that even for entities with a clear policy requirement, there are many instances of long delays in approving annual leave. Mean and median days taken to approve annual leave following commencement for all entities included in Appendix 8.

Annual leave payments

2.29 Section 16 of the Australian Public Service Enterprise Award 2015 states that annual leave is to be paid at the ordinary hourly rate of pay, except where applicants use annual leave at half pay in accordance with enterprise agreements.

2.30 In assessing the accurate payment of annual leave, the ANAO relied on the assurance obtained over automated system controls for four entities where these have been tested as part of the financial statements audits and complemented this with substantive sample testing as part of this audit. These automated system controls have been established to support the accurate payment of annual leave entitlements consistent with legislative, award and enterprise agreement requirements. ANAO analysis found that entities have established effective systems controls to support the accurate payment of annual leave where this was tested as part of the financial statements audits.

2.31 The ANAO undertook sample testing for annual leave transactions for the six entities where financial statements audits have not obtained assurance over automated controls for the payment of annual leave due to the selection of alternative audit approaches. ¹⁰ ANAO sample testing of leave transactions at these entities demonstrated the accurate payment of annual leave.

Purchased leave maximum threshold and approvals

2.32 As shown above in Table 2.1 entity enterprise agreements include entitlements for purchased leave ranging from four to 10 weeks. For example, Finance’s enterprise agreement states that ‘Where approved by the delegate, employees may purchase from one to four weeks additional leave each year.’

2.33 The ANAO undertook data analysis of purchased leave transactions to determine compliance with enterprise agreement provisions. The analysis indicates that two entities (Services Australia and NIAA) were not compliant with purchased leave maximum entitlement requirements. A total of six employees or less than one per cent of employees accessing purchased leave at Services Australia purchased more leave than the annual four-week entitlement. Two employees or 1.5 per cent of employees accessing purchased leave at NIAA were granted purchased leave exceeding the enterprise agreement entitlement shown in Table 2.1.¹¹

2.34 The ANAO also reviewed samples of purchased leave transactions to determine whether appropriate approvals were obtained and conditions relating to existing annual leave balances were not exceeded. The ANAO found that eight of 10 entities complied with purchased leave approval requirements. Twenty-four per cent of samples at DISER and eight per cent of samples tested at Finance were not compliant with approval requirements. Non-compliance at DISER was because the approval was provided by an officer without the requisite delegation, and the non-compliance at Finance was that there was no record of the approval.

2.35 See Appendix 3 for additional results on purchased leave.

Existence of purchased leave with annual leave exceeding threshold

2.37 As a control to prevent further significant balances of leave being accumulated, some entities have established policies that either prohibit or limit the approval of purchased leave when the enterprise agreement threshold for annual leave has been exceeded.

2.38 MDBA and ACIC have established policy requirements that specify purchased leave will only be approved for employees who have not exceeded the annual leave threshold set out in enterprise agreements and policies. For example, ACIC’s employment policy states:

Employees are ordinarily expected to utilise their Annual Leave prior to taking Purchased Leave. In any event, an application for Purchased Leave will not be approved if the employee holds an Annual Leave credit equivalent to four (4) weeks, except in extenuating circumstances such as future leave requirements to undertake an extended holiday.

2.39 The ANAO tested for the interaction of purchased leave use with annual leave balances for MDBA and ACIC as these were the only two entities with a relevant clause and found no instances of non-compliance.

Management reporting and assurance

2.40 Regular reporting to management on the status of employee leave and compliance with legislative, award and enterprise agreement requirements assists entities to identify trends in the use of employee leave and supports management to respond to instances of non-compliance.

Assurance arrangements

2.41 AHL and Finance have not established effective standardised systems generated reporting which would support the effective monitoring of compliance. The ANAO also observed inconsistencies in data, such as inconsistent date fields used to record the approval date of leave. There were also delays in obtaining sufficient assurance over the completeness of leave data provided.

Management reporting

2.42 Entities advised that they manage employee leave balances through system notifications and reminders when leave balances approach or exceed thresholds and dashboard reporting on human resources metrics for line managers and business areas.

2.43 All entities except ACIC and AHL have established reporting to senior management that include trends and statistics relating to the administration of employee leave. The following arrangements are in place for the eight entities that have established management reporting:

• ATO provides reporting on leave use trends and mitigation strategies for unscheduled leave to business groups and provides group level workforce reporting that includes leave statistics, trends and analysis, and commentary.
• CER has monthly reporting that is provided to managers and executives at branch and division level. Reports includes employees who are approaching or over enterprise agreement limits.
• DISER senior executives have access to point-in-time dashboards which include statistics on leave balances, absentee rates, and other relevant human resource metrics. Group level flexible leave reports are also provided.
• Finance provides monthly workforce reporting to all senior leaders. The reports provided include employee leave balances and highlight anomalies such as excess annual, APS level flexible leave and Executive Level time off in lieu balances.
• MDBA provides monthly reporting to program and portfolio managers on recommendations and actions relating to: unapproved flex sheets; excess annual and flexible leave balances; low personal leave balances; absenteeism; and forecast leave.
• NDIA provides monthly reporting to business areas and senior management that highlight key trends relating to the use of leave, raise awareness of leave arrangements, and support the consistent processing of leave applications.
• NIAA provides statistics on annual leave, flexible leave, and unscheduled absences each quarter for its Chief Operating Officer and as part of its internal reporting to the NIAA Executive Board. Senior executive managers also have access to point in time dashboards.
• Services Australia produces monthly reports for its executive that include trend analysis of annual leave use and annual leave balances, workforce composition, attrition and separation rates, and workforce capability and diversity statistics.

2.44 For the two entities with limited or no reporting to the senior executive the following reporting arrangements are in place:

• AHL has not implemented reporting at any level relating to compliance with employee leave provisions.
• ACIC provides quarterly reporting on excess annual leave balances to employees and line managers and a twice-yearly report to its executive committee on annual leave. ACIC does not provide reporting on compliance activities undertaken or statistics and trend analysis for other types of leave.

3.1 The Long Service Leave (Commonwealth Employees) Act 1976 establishes long service leave entitlements and obligations for Australian Government public service employees and Australian Government public service employers. To assess entity compliance with long service leave provisions the ANAO examined whether entities:

• developed and implemented policies for the administration of long service leave that align with legislative and enterprise agreement provisions; and
• complied with legislative, enterprise agreement and policy requirements in the administration of long service leave.

Have entities established policies for the administration of long service leave that align with relevant legislation and enterprise agreement provisions?

3.2 Australian Government public service employees accrue an entitlement of 0.3 months long service leave for each year of continuous service and become eligible to use this following the completion of 10 years continuous service in accordance with sections 11, 12, 16 and 18 of the Long Service Leave (Commonwealth Employees) Act 1976. Long service leave for particular officers of the MDBA is administered under the Long Service Leave Act 1976 (ACT) with leave accruing at a rate of 6.5 working days each year, with leave accessible following seven years continuous service. ¹²

3.3 Entity enterprise agreements also include provisions for long service leave consistent with the Long Service Leave (Commonwealth Employees) Act 1976. Agreements for nine entities state the minimum amount of long service leave that can be taken is seven calendar days (14 calendar days at half pay) and that long service leave can be broken only by attendance at work, maternity and parental leave, or otherwise provided by conditions of the enterprise agreement. Some officers at MDBA, who were previously employed at the Murray-Darling Basin Commission (MDBC) can access long service leave in blocks of a minimum five working days (10 days at half pay). These employees were not Commonwealth employees at the time of their engagement at MDBC, as such their long service leave is administered in accordance with the Long Service Leave Act 1976 (ACT).

Policies and procedures for administering long service leave entitlements

3.4 Nine entities developed policies for the administration of long service leave (LSL) consistent with legislative and enterprise agreement requirements. AHL has no policies in place for the management of staff leave.

3.5 Table 3.1 sets out entity long service leave entitlements and obligations established in legislation, enterprise agreements and entity policies.

Table 3.1: Entity long service leave entitlements and administrative arrangements

Note a: Some employees at MDBA who had previously been employed at the Murray-Darling Basin Commission accrue long service leave at a rate of 6.5 working days for each year of eligible service. Those employees previously employed at MDBC are able to take long services leave in five day blocks at full-pay and 10 day blocks at half-pay.

Source: ANAO analysis of entity enterprise agreements, leave policies and procedures.

Did entities comply with legislative, enterprise agreement and policy requirements in the administration of long service leave?

Long service leave balances (including accruals)

3.6 Long service leave for full-time employees accrues at a rate of 0.3 months leave for each year of continuous service as stated in the long service leave formula set out in section 18 of the Long Service Leave (Commonwealth Employees) Act 1976. ¹³

3.7 Assurance has been obtained over the accurate accrual and financial reporting of long service leave balances through:

• IT general and application controls testing that is complemented by employee benefits controls and substantive testing for the eight entities where this is the related financial statements audit approach; and
• substantive testing of employee benefits transactions and balances for the remaining two entities, ACIC and AHL.

3.8 Results of the 2020–21 financial statement audits of the 10 entities concluded that there were no material adverse findings relating to employee leave transactions and balances, including long service leave.

Recognition of prior service (including approvals), entitlement to long service leave and continuity of service

3.9 Section 11 of the Long Service Leave (Commonwealth Employees) Act 1976 and regulations 6–9 and 11 of the Long Service Leave (Commonwealth Employees) Regulations state that Australian Government employees are required to achieve 10 years qualifying service to become eligible for long service leave.¹⁴

3.10 ANAO analysed entity data to determine whether entities had granted long service leave to only those employees who had met qualifying service requirements. Analysis shows that all entities except Services Australia were compliant, granting long service leave to only those employees meeting minimum qualifying service requirements. There was one employee (less than one per cent) at Services Australia who was granted long service leave without meeting the minimum 10 year qualifying service requirements. This occurred because the employee had a break in service greater than 12 months.

3.11 Section 12 of the Long Service Leave (Commonwealth Employees) Act 1976 establishes continuity of service requirements that prohibit breaks in service of longer than 12 months. Sample testing found that all entities were compliant with continuity of service obligations.

3.12 Detailed results are included at Appendix 4.

Timeliness of approval of long service leave

3.13 To facilitate appropriate resourcing of operational requirements and efficient use of resources, some entity policies and/or enterprise agreements require that long service leave is approved in advance of being taken. For example, NDIA’s enterprise agreement has a general leave provision which states that:

Generally, you must obtain prior approval for annual, purchased, long service or flex leave or give notice of the taking of unplanned leave, as soon as practicable, including notice of the duration, or expected duration, of the leave.

3.14 As stated at paragraph 2.23, there may be instances where the commencement of annual and other schedulable types of leave before approval may be explained. As stated at paragraphs 2.23 and 2.24, to account for these instances the ANAO has applied a threshold of 10 per cent to its analysis. Only Services Australia (see Figure 3.1) has a rate of long service leave commencing prior to approval below 10 per cent.

3.15 Six entities (ATO, CER, Finance, MDBA, NDIA and NIAA) have established enterprise agreement provisions or policy requirements that long service leave be approved before the commencement of this leave as detailed in Figure 3.1 shows the rates of leave being approved following commencement for entities with and without an explicit requirement for prior approval of long service leave.

Figure 3.1: Entity rates of long service leave commencing prior to leave being approved

Source: ANAO analysis of entity leave data between 1 July 2020 and 31 October 2021.

Use and payments of long service leave

3.16 Analysis of long service leave data relating to minimum long service leave usage requirements in enterprise agreements and entity policies indicates that AHL, CER, Finance, MDBA and NIAA were compliant with relevant provisions between 1 July 2020 to 31 October 2021. A small number of instances (between one and eight) at ACIC, ATO, DISER, NDIA, and Services Australia where employees accessed long service leave for a period of less than seven days at full pay or 14 days at half pay. For these entities the rate of non-compliance was one per cent or less.

3.17 Section 16 of the Long Service Leave (Commonwealth Employees) Act 1976 sets out the requirement for long service leave to be granted to employees by the approving authority and for payments in lieu of unused long service leave credits upon cessation of employment. ANAO undertook sample testing of the granting of long service leave and the payment in lieu of long service leave and found two instances (8 per cent) of non-compliance at NDIA, where the approver did not have the required delegation.

3.18 Detailed results are included at Appendix 4.

Inappropriate use of long service leave

3.19 Enterprise agreements and entity policies set out that periods of long service leave can only be broken by attendance at work except where provided for by legislation such as the Maternity Leave (Commonwealth Employees) Act 1973, parental leave or where specified in enterprise agreements. For example, ATO’s enterprise agreement states:

The minimum period during which Long Service Leave can be taken is seven calendar days (at full pay, or 14 days at half pay). Except as otherwise provided by legislation or this Agreement, Long Service Leave can only be broken by attendance at work.

3.20 All entities except AHL have also established policies regarding the use of long service leave. This incorporates consideration for the use of long service leave in a manner consistent with the accrued entitlement — being based on calendar days as opposed to business days.

3.21 ANAO testing of long service leave transactions identified that only AHL was compliant with requirements that leave be broken only by types of leave allowed in legislation, enterprise agreements and/or leave policies. Nine entities had at least one instance of long service leave not in compliance with this requirement. The rate of long service leave being broken by leave in a manner not consistent with its enterprise agreement and relevant policy ranges from 1.5 per cent of all long service leave transactions at Services Australia to 11 per cent at DISER.

3.22 Detailed results are included at Appendix 4.

4.1 The National Employment Standards (NES) establish minimum entitlements for personal (and carer’s) leave. Additional entitlements for Australian Government public sector employees are established in the Australian Public Service Enterprise Award 2015 and enterprise agreements.

4.2 To assess entity compliance with personal leave provisions the ANAO examined whether entities:

• developed and implemented policies for the administration of personal (and carer’s) leave that align with legislative, award and enterprise agreement provisions; and
• complied with legislative, award, enterprise agreement, and policy requirements in the administration of personal (and carer’s) leave.

Have entities established policies for the administration of personal (and carer’s) leave that align with relevant legislation, award and enterprise agreement provisions?

4.3 The NES establish a minimum entitlement of 10 days paid personal leave for full-time employees. For Australian Public Service (APS) employees, section 17 of the Australian Public Service Enterprise Award 2015 (the award) states that employees who are entitled to personal leave under the NES are entitled to accrue an additional five days personal (and carer’s) leave each year and that an employee on personal leave will be paid at the employee’s ordinary hourly rate. Entity enterprise agreements may include additional personal leave entitlements above those specified in the NES and the award.

4.4 Table 4.1 details enterprise agreement entitlements to personal (and carer’s) leave for employees of each entity. Enterprise agreements for eight of 10 entities establish annual limits on personal leave taken without supporting evidence, ranging from five days at ACIC, MDBA and Services Australia to 10 days at CER. All entities except Services Australia have a requirement for consecutive personal leave days to be supported by documentary evidence when exceeding limits as shown in Table 4.1.

4.5 In addition to entitlements for personal leave, enterprise agreements at all 10 entities also include entitlements to paid bereavement and/or compassionate leave of either 2 or 3 days for each eligible instance. The ANAO has incorporated testing of bereavement and compassionate leave where this forms part of personal leave for employees. Where it is separately recognised, this falls outside the scope of this audit.

Policies for administering personal leave entitlements

4.6 Nine entities developed policies for the administration of personal (and carer’s) leave consistent with legislation, award and enterprise agreement requirements. AHL has no policies in place for the management of staff leave. Table 4.1 sets out personal leave entitlements and obligations established in established in legislation, award, enterprise agreements and entity policies.

Table 4.1: Annual personal (and carer’s) leave entitlements and administrative arrangements^{a b}

Note a: Personal leave entitlements include carer’s leave and accrual rates are for full-time equivalent staff. Pro-rata entitlements exist for part-time employees.

Note b: Personal leave typically accrues annually on the employee’s anniversary of commencement, however some entities such as Services Australia accrue personal leave daily, with leave credited monthly.

Note c: In AHL, a determination made under subsection 24(1) of the Public Service Act 1997 covering COVID-19 leave arrangements on 25 March 2020 varied the enterprise agreement requirements for personal leave without evidence from 3 consecutive days to 5 consecutive days, and removed the cap of 4 days of personal leave per year requirement for a medical certificate.

Note d: ATO employees engaged prior to 30 November 2011 accrue 3.4 weeks personal leave annually. ATO employees engaged on or after 30 November 2011 accrue one-week personal leave on engagement and each annual anniversary each year after, plus 0.2 weeks on engagement and monthly thereafter.

Note e: The production of evidence for staff exceeding the annual personal leave limit at MDBA is at the delegate’s discretion.

Source: ANAO analysis of entity enterprise agreements, leave policies and procedures between 1 July 2020 and 31 October 2021.

Did entities comply with legislative, award, enterprise agreement and policy requirements in the administration of personal (and carer’s) leave?

Entitlement and use of personal (and carer’s) leave

4.7 As shown in Table 4.1 all entity enterprise agreements include clauses and entitlements relating to personal (and carer’s) leave, which in most cases provide additional entitlements to personal leave without documentary evidence than the minimum established in the award.

4.8 The ANAO tested entity data and found that ACIC was the only entity compliant with requirements for consecutive personal leave days without evidence. Non-compliance with consecutive day requirements ranged from two instances at the ATO (less than 1 per cent) to 150 instances at NIAA (11.3 per cent) where employees accessed more days without evidence than permitted in enterprise agreements.

4.9 The ATO was the only entity compliant with annual personal leave without evidence requirements. This is because the ATO has implemented a HRMIS control that prevents employees from being able to access personal leave without evidence above annual personal leave limits. Non-compliance with annual thresholds, where employees accessed personal leave without evidence above limits established in enterprise agreements, ranged from less than one per cent at NDIA and Services Australia to 25.4 per cent at MDBA.

4.10 Results for all entities with a relevant agreement clause are included in Appendix 5.

Supporting evidence for personal (and carer’s) leave

4.11 The National Employment Standards (NES) within the Fair Work Act 2009 set out a range of entitlements for paid and unpaid personal (and carer’s) and compassionate leave:

• sections 96, 97 and 107 establish entitlements for ten days paid personal (or carer’s) leave;
• sections 102, 103 and 107 establish entitlements for two days unpaid personal (or carer’s) leave for each eligible instance; and
• sections 104, 105 and 107 establish entitlements for two days compassionate leave for each eligible instance.

4.12 Section 17 of the Australian Public Service Enterprise Award 2015 states that an employee may be granted personal (and carer’s) leave with pay subject to available credits, without production of evidence, to the extent of five days in any calendar year and that no more than three consecutive days of personal/carer’s leave may be taken without the production of evidence.

4.13 The ANAO undertook sample testing of personal leave transactions to determine compliance with supporting documentary evidence (e.g. medical or other certificates), entitlement and approval requirements where supporting documentary evidence was required as outlined in paragraph 4.11.¹⁵ Testing found that seven entities (ACIC, AHL, CER, DISER, MDBA, NDIA and NIAA) were compliant, maintaining sufficient documentation for each leave transaction. The ANAO identified non-compliance at Services Australia (four per cent), ATO (nine per cent), and Finance (12 per cent).

Timeliness of approval of personal leave

4.15 To appropriately demonstrate compliance with legislative, award and enterprise agreement provisions, entity policies should require employees to apply for and substantiate personal leave as soon as possible upon the recommencement of work. Some entities have established policies requiring the timely submission of supporting evidence for personal leave. For example, Services Australia’s personal leave policy states that employees must provide evidence when required within five business days of the last day of personal leave.

4.16 Analysis found that the average number of business days taken to approve personal leave after the leave ended ranged between 4.1 days at ATO to 7.4 days at DISER. Figure 4.1 sets out the distribution in days taken to approve personal leave following return to work for all 10 entities.

4.17 Figures for all entities are included in Appendix 8.

5.1 The Fair Work Act 2009, Maternity Leave (Commonwealth Employees) Act 1973 and entity enterprise agreements establish employee entitlements for maternity and parental leave as well as supporting partner leave or equivalent entitlements. To assess entity compliance with maternity and parental leave provisions the ANAO examined whether entities:

• developed and implemented policies for the administration of maternity and parental leave that align with legislative, award and enterprise agreement provisions; and
• complied with legislative, award, enterprise agreement and policy requirements in the administration of maternity and parental leave.

Have entities established policies for the administration of maternity and parental leave that align with relevant legislative, award, enterprise agreement and policy provisions?

5.2 Sections 67 and 70 of the Fair Work Act 2009, establish entitlements for up to 52 weeks unpaid parental leave for employees with 12 months qualifying service.

5.3 Sections 6 and 7 of the Maternity Leave (Commonwealth Employees) Act 1973 and section 18 of the Australian Public Service Enterprise Award 2015 establish entitlements for up to 52 weeks maternity leave of which 12 weeks is paid at the employees’ ordinary rate of pay. To be eligible for paid maternity leave employees must meet a minimum of 12 months continuous service prior to the commencement of leave.

5.4 Entity enterprise agreements include entitlements for an additional two or four weeks paid maternity/parental leave as well as paid supporting partner leave ranging from two to six weeks as set out in Table 5.1.

Policies for administering maternity and parental leave entitlements

5.5 Nine entities developed policies for the administration of maternity and parental leave consistent with legislation, award and enterprise agreement requirements. AHL has not established or implemented policies for the management of staff leave.

5.6 Table 5.1 details key maternity and parental leave enterprise agreement entitlements and policy requirements.

Table 5.1: Maternity and parental leave entitlements and administrative arrangements

Note a: Employees can access additional periods of unpaid leave (up to 24 months in total), subject to approval by the entity delegate.

Note b: ATO’s agreement includes 4 weeks of maternal leave under the same eligibility rules as maternity leave.

Note c: MDBA has an explicit clause for maternity leave but not for parental or supporting partner leave.

Note d: NDIA’s maternity leave fact sheet has a clause requiring the provision of documentary evidence to support the leave which is not included in NDIA’s enterprise agreement or leave policy.

Source: ANAO analysis of entity enterprise agreements, leave policies and procedures between 1 July 2020 and 31 October 2021.

Did entities comply with legislative, award, enterprise agreement, and policy requirements in the administration of maternity and parental leave?

Entitlement and use of maternity leave

5.7 As shown in Table 5.1 entity enterprise agreements establish entitlements to paid maternity leave ranging from 14 to 16 weeks. ANAO analysis of entity maternity leave data found that six entities, ACIC, AHL, CER, Finance, NDIA and Services Australia were compliant with paid maternity leave entitlements. Non-compliance at the remaining four entities ranged from one instance each at DISER (less than one per cent) and MDBA (12.5 per cent), to three instances at NIAA (9.7 per cent) and ATO (less than one per cent). In all these instances the employees received more paid maternity leave than the entitlement.

5.8 Section 6 of the Maternity Leave (Commonwealth Employees) Act 1973 sets out entitlements for up to 52 weeks paid and unpaid maternity leave as well as an additional period of up to 52 weeks leave following delegate approval. The ANAO undertook data analysis of employees exceeding the entitlement of 52 weeks unpaid leave. ACIC, AHL, CER, MDBA, NDIA and NIAA were compliant with this requirement with no instances of unpaid maternity leave exceeding the 52 week entitlement. Instances of non-compliance for the remaining four entities ranged from one employee at Finance (1.7 per cent) to 15 employees at DISER (nine per cent).

5.9 Section 7 of the Maternity Leave (Commonwealth Employees) Act 1973 establishes requirements for the provision of documentary evidence supporting fitness for duty within six weeks of the expected delivery date and fitness to resume duties following the birth. Two entities, ACIC and NDIA, did not have any relevant transactions for sample testing. AHL, CER, DISER, NIAA, and MDBA were compliant with documentary evidence requirements. One instance (eight per cent) of non-compliance was identified at the ATO and three instances (14 per cent) at Finance. In these instances, there was no evidence on file supporting the employees’ continuation of work within six weeks of the expected date of birth.

5.10 Section 7B of the Maternity Leave (Commonwealth Employees) Act 1973 provides entitlements for paid maternity leave following the completion of 12 months continuous service. The ANAO undertook data analysis of employees accessing paid maternity leave to determine compliance with eligibility requirements that employees must have 12 months prior service before accessing paid maternity leave. The ANAO’s analysis identified that all 10 entities were compliant with this requirement. The ANAO did not identify any instances where employees were granted maternity leave without meeting the 12 months minimum continuous service requirement.

5.11 Section 7B of the Maternity Leave (Commonwealth Employees) Act 1973 states that maternity leave should not affect continuity of service. Enterprise agreements also have requirements that specify the amount of maternity leave which qualifies as service for the purposes of accrued leave and benefits. ANAO analysis of entity data identified that ACIC, CER, Finance and NDIA were compliant. Non-compliance was identified with the remaining six entities (AHL, ATO, DISER, MDBA, NIAA, and Services Australia) where employees continued accruing leave and other benefits beyond the period of paid maternity leave specified in enterprise agreements and set out in Table 5.1. The number of instances ranging from one instance each at AHL (10 per cent), DISER (less than one per cent), MDBA (12.5 per cent) and NIAA (3.1 per cent), to 12 at ATO (2.5 per cent).

5.12 Detailed results are included at Appendix 6.

Entitlement and use of parental and supporting partner leave

5.13 Sections 70–79 of the Fair Work Act 2009 and the National Employment Standards (NES) provide entitlements for up to 52 weeks unpaid parental leave and the right to request an additional period of unpaid parental leave for employees with a minimum 12 months continuous service. Section 18 of the Australian Public Service Enterprise Award 2015 also includes entitlements for parental leave consistent with the Fair Work Act and NES.

5.14 The ANAO undertook data analysis to determine whether employees accessing parental leave exceeded the entitlement threshold. All entities except ATO were compliant with the 52 weeks parental leave entitlement established in legislation. ATO had two instances (less than one percent) of non-compliance where parental leave was granted exceeding the entitlement.

5.15 The ANAO undertook sample testing for compliance with paid and unpaid parental leave requirements for eligibility. One instance of non-compliance with unpaid parental leave provisions was identified at the ATO (four per cent), where the leave was incorrectly classified, and MDBA (17 per cent) where the employee was granted paid parental leave despite no longer being eligible at the time leave was taken.

5.16 Supporting partner leave is not consistently defined in all enterprise agreements but a comparable entitlement is included in agreements for all 10 entities ranging from two to six weeks. ANAO analysis of entity data indicates that five entities (ACIC, AHL, MDBA, NDIA and NIAA) were compliant with relevant provisions when granting supporting partner leave. Non-compliance was identified at the other five entities (ATO, CER, DISER, Finance, and Services Australia) with the number of employees receiving paid supporting partner leave (or equivalent entitlement) above specified rates ranging from one employee at CER (7.7 per cent) and Services Australia (less than one percent) to nine employees at the ATO (three per cent).

5.17 Outcomes from ANAO analysis is included at Appendix 6.

Approval and documentary evidence

5.18 All entities have enterprise agreement and/or policy requirements for maternity and parental leave to be supported by documentary evidence.¹⁶ For example:

• Services Australia’s parental leave policy states that to apply for leave employees are to supply evidence. This includes a medical certificate with a due date, or official evidence of an eligible adoption, fostering or surrogacy arrangement.
• Finance and NIAA’s maternity leave policies state that documentary evidence must be submitted with the application, either: a doctor’s or obstetrician’s certificate stating the expected date of birth; or approval for adoption or permanent care order from the person/organisation with statutory responsibility for the placement of the child.

5.19 The ANAO tested a sample of leave transactions for each entity and found that AHL, ACIC, ATO, CER, DISER, MDBA, NIAA and NDIA were compliant with documentary evidence requirements for maternity leave. Three instances of non-compliance were identified at Services Australia (12 per cent) and five instances at Finance (20 per cent).¹⁷ In each of these instances the application for maternity leave was not supported by sufficient documentary evidence.

5.20 Sample testing across all entities where there is a requirement to obtain supporting documentation for parental leave found that ACIC, AHL, ATO¹⁸, CER, MDBA and NDIA were compliant, with appropriate documentary evidence on file for each transaction tested by the ANAO. Instances of non-compliance were identified at four entities with the rate of non-compliance 100 per cent at NIAA, 92 per cent at DISER, 64 per cent at Finance and eight per cent at Services Australia.¹⁹

5.21 Outcomes from sample testing is included at Appendix 6.

Timeliness of approval of maternity and parental leave

5.29 To facilitate appropriate resourcing of operational requirements and efficient use of resources, entity policies require that maternity and parental leave is approved in advance of being taken. This is consistent with the Australian Public Service Commission’s classification of these types of leave as schedulable.

5.30 Seven entities, ATO, CER, DISER, Finance, MDBA, NDIA and NIAA have established requirements in enterprise agreements or policies that maternity and parental leave be approved prior to commencement. Rates of non-compliance, where leave commenced prior to approval for all seven entities with a requirement are detailed in Table 5.2. There may be a limited number of instances where maternity or parental leave has been approved and a need arises for the leave to commence in advance of this.

Table 5.2: Entity rates of non-compliance with polices requiring the prior approval of maternity and parental leave

Note: Maternity leave approvals dates not captured in AHL’s data.

Source: ANAO analysis of entity leave data between 1 July 2020 and 31 October 2021.

5.31 Figure 5.1 shows the rates of maternity and parental leave approvals being provided following the commencement of leave.

Figure 5.1: Rates of maternity and parental leave commencing prior to the approval of leave^a

Note a: AHL, CER, Finance and MDBA did not have any instances of maternity leave commencing prior to the leave being approved.

Source: ANAO analysis of entity leave data between 1 July 2020 and 31 October 2021.

6.1 The Australian Public Service Enterprise Award 2015 (the award) and enterprise agreements establish rights, obligations, and entitlements for flexible leave for eligible Australian Public Service (APS) level Australian Government public service employees. Entity enterprise agreements may also include provisions for Executive Level (EL) time off in lieu (TOIL).

6.2 To determine compliance with award, enterprise agreement and entity policy requirements the ANAO examined whether entities:

• developed and implemented policies for the administration of APS level flexible leave and Executive Level TOIL that align with award and enterprise agreements; and
• complied with award, enterprise agreement and policy requirements in the administration of APS level flexible leave and Executive Level TOIL.

Have entities established policies for the administration of APS level flexible leave and Executive Level time off in lieu that align with award and enterprise agreement provisions?

6.3 Section 8 of the Australian Public Service Enterprise Award 2015 (the award) establishes flexible leave entitlements, allowing employees to set alternative patterns of attendance.

6.4 Enterprise agreements establish eligibility for flexible leave, which is restricted to employees at the APS 6 level or below. As shown in Table 6.1 maximum flexible leave credit and debit balances are also established in enterprise agreements. Some agreements allow for balances in excess of those set out in the agreement to be carried forward following delegate approval.

6.5 Entity enterprise agreements reviewed by the ANAO, include clauses relating to time off in lieu (TOIL) for Executive Level employees. Finance has the most detailed TOIL clause of the 10 entities, providing: managers will approve the accrual of TOIL for EL employees (and their equivalents) for work performed in excess of 8 hours 30 minutes on any one day, on a weekend or public holiday, or during annual closedown; TOIL will accrue and may be taken on an hour-for-hour basis Monday to Friday, and at a rate of 1.5 hours per hour for work performed on a weekend, annual closedown or public holiday.

6.6 The remaining nine entities include less detailed TOIL clauses, for example, NIAA and ACIC enterprise agreements state that where an Executive Level employee undertakes significant additional productive effort which involves working in excess of ordinary hours for sustained periods, the Chief Executive Officer (delegate) and employee may agree arrangements for fair and reasonable time off in lieu (TOIL) to recognise the additional effort.

6.7 Nine entities developed policies for the administration of flexible leave consistent with award and enterprise agreement requirements. AHL has no policies in place for the management of staff leave.

6.8 Table 6.1 sets out analysis on the alignment between flexible leave and TOIL entitlements, and the policies for their administration.

Table 6.1: Flexible leave and time off in lieu administrative arrangements

Note a: Settlement clauses specify the period of time employees have to reduce flexible leave credit and debit balances below limits established in enterprise agreements when limits are exceeded.

Source: ANAO analysis of entity enterprise agreements, leave policies and procedures between 1 July 2020 and 31 October 2021.

Did entities comply with award, enterprise agreement and policy requirements in the administration of flexible leave and time off in lieu?

6.9 Eight entities manage flexible leave within existing human resource management information systems. Two entities, ACIC and AHL have not established flexible leave functionality in existing human resource management information systems and administer employee flexible leave using spreadsheets and local arrangements between APS level employees and their supervisor. The ANAO did not undertake data analysis or sample testing of flexible leave at ACIC and AHL.

Flexible leave debit and credit balances

6.10 The award establishes entitlements for APS level employees to access flexible leave and entity enterprise agreements establish the specific provisions such as maximum credit and debit balances as shown in Table 6.1. For example, CER’s enterprise agreement states that the maximum carryover of flex time credits will be 37 hours and 30 minutes, and the maximum flex time debits will be 10 hours, unless exceptional circumstances are approved by the agency head.

6.11 For eight entities with human resource management information systems, ANAO undertook data analysis of employees exceeding the flexible leave maximum credit and/or debit balance to determine compliance with enterprise agreement requirements. Data indicates that employees at all eight entities exceeded maximum flexible leave credit or debit limits established in enterprise agreements, ranging from 3.4 per cent of APS level employees at Services Australia to 15.4 per cent at MDBA.

6.12 The ATO’s rate of employees exceeding flexible credit or debit limits was 6.6 per cent. The ATO advised the ANAO that the unprecedented workload undertaken by the ATO during the audit period to deliver on measures arising from the COVID-19 pandemic had an impact on the ATO’s management of flexible leave.

6.13 ANAO identified a combined 102 employees at Finance, NDIA and Services Australia with a flexible debit balance greater than negative 200 hours or more than five weeks. A combined total of eight employees at ATO and Services Australia had a flexible leave credit balance that exceeded 600 hours (or 16 weeks).

6.14 Entity results are included at Appendix 7.

Flexible leave settlement periods

6.15 As shown in Table 6.1 six entities have requirements that excess flexible leave credit and debit balances are to be settled within timeframes specified in enterprise agreements or policies. For example:

• ATO’s flexible leave policy establishes a maximum credit to be carried over consecutive settlement periods, stating that if you have more than the maximum credit at the end of the settlement period because of unanticipated work demands or leave, your manager will approve enough flex leave in the next settlement period to reduce your credit to an acceptable level.
• Services Australia’s flex and time off in lieu policy establishes excess flex credit or debit balances that are not to be carried over to the next settlement period apart from exceptional circumstances. If employees have excess flex credits for more than two settlement periods, this must be reduced to under the allowable amount in the next settlement period.

6.16 Analysis of non-compliance with settlement period requirements identified that employees at the six entities had employees who maintained flexible leave balances exceeding the enterprise agreement limits over consecutive settlement periods. This ranged from 2.6 per cent of flexible leave records at Services Australia to 13.8 per cent at MDBA.

6.17 Entities should actively monitor compliance with settlement clauses and implement strategies to ensure employees required to work significant additional hours are only doing so for short periods of time and in accordance with enterprise agreement provisions.

6.18 Entity results are included at Appendix 7.

TOIL entitlements

6.37 As shown in Table 6.1 all entities have enterprise agreement clauses relating to time off in lieu (TOIL). Executive Level (EL) employees at these entities are not required to consistently document regular hours worked and/or submit periodic timesheets.

6.38 As stated in paragraph 6.5, Finance has clear requirements for the administration of EL TOIL and has designed and implemented processes for the recording of both the accrual and use of EL TOIL. The ANAO gained an understanding of Finance’s system for administering EL TOIL and observed that applications to recognise additional hours are submitted and approved in Finance’s human resource management information system (HRMIS). The HRMIS automatically calculates the rate of TOIL that can be accessed in accordance with accrual requirements set out in Finance’s enterprise agreement (see paragraph 6.5). Manager approvals to access TOIL balances are also recorded in Finance’s HRMIS.²⁰

6.39 ATO, NDIA, NIAA and Services Australia have advised that they have processes in place for the recording and management of TOIL in HRMIS. These four entities only record days taken using TOIL and do not record the amount or dates of the additional hours worked to support the use of TOIL.

6.40 Five entities (ACIC, AHL, CER, DISER and MDBA) advised that IT or other systems and processes are either not used or not consistently used to record the approval, recognition and use of TOIL. The ANAO was further advised by these entities that TOIL is typically managed informally between employees and their manager.

6.41 Due to inconsistent use of information management systems for the administration of TOIL, the ANAO did not undertake further analysis relating to the administration of TOIL.

Appendix 1 Entity responses

Australian Taxation Office additional response

The ATO does have concerns with the data presented in scatterplots in figures 2.2 and 4.1 and does not believe they appropriately represent the performance of ATO managers in approving the tens-of-thousands of leave events that occurred in the audit period. The graphs do not clearly reflect the distribution of elapsed time (days) taken to approve leave and do not give context to the scale of the number of leave events that are represented. This representation may lead to incorrect inferences as to the comparative performance of agencies. Furthermore, the analysis and representation of this data does not sufficiently recognise that there are valid reasons that leave may be applied for and approved after it is taken, including for example where a staff member extends their leave, or where they may have depleted their personal leave and seek to use annual leave in the event of illness.

ANAO comment on Australian Taxation Office’s additional response

The ANAO observed 29,497 instances of annual leave being approved following the commencement of that leave and 149,074 instances of personal leave (which are ordinarily approved upon return to work). Figure 2.2 and Figure 4.1 are intended to demonstrate the distribution of days taken to approve annual and personal leave following either the commencement of annual leave or return to work for personal leave. The ANAO has included footnotes to these figures to Appendix 8 where the number of instances, mean and median for each entity are provided to ensure appropriate context is available to readers. The ANAO has also acknowledged that there may be some instances where it may be appropriate for scheduled leave to be approved following commencement of leave (see paragraphs 2.23 and 2.24).

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s 2021–22 Corporate Plan states that the ANAO’ s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on any identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit or advised by the entity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

• ACIC has a project in progress to develop improvements in the ability to monitor and report. This will include the development of several new fields and reports so that management can better monitor and report against leave compliance. This project had commenced prior to the audit commencing, however the ANAO was advised the audit has assisted in guiding and directing where effort was required.
• AHL has advised it has recently commissioned a review of its human resource management information needs, to determine if a more suitable (and affordable) system exists that would provide an increased range of functionality and allow a greater degree of automation, for leave as well as other functions (including human resource, recruitment, learning and development, and work health and safety).
• ATO and Services Australia communicated the engagement and analysis from the audit will inform considerations for the Government Enterprise Resource Planning (GovERP) initiative for a common ERP platform, comprising a number of essential corporate capabilities to deliver back-office services, including financial, human resources and procurement services and reporting.
• NDIA has initiated various leave management strategies including communication and education activities to address high annual leave balances, as well as exploring options to expand monitoring mechanisms through data analytics. While these initiatives commenced prior to the audit, the engagement and analysis from the audit will inform considerations in the design of our HR compliance dashboard (to better support compliance with related leave conditions), the review of specific supporting documents, and improvements in data analytics required for monitoring purposes.

Appendix 3 Annual and purchased leave data table

Appendix 4 Long service leave data table

Appendix 5 Personal leave data table

Appendix 6 Maternity and parental leave data table

Appendix 7 Flexible leave and TOIL data table

Appendix 8 Leave approvals for scheduled and unscheduled leave

1 Several entities have workplace determinations in place under subsection 24(1) of the Public Service Act 1999 extending the timeframe of operation for enterprise agreements.

2 Enterprise bargaining at the entity level in the Australian Public Service was first introduced in 1993 through the Industrial Relations Reform Act 1993. This allowed each entity to have pay and conditions specific to the work performed.

3 Section 8 of the PGPA Act states that ‘proper, when used in relation to the use or management of public resources, means efficient, effective, economical and ethical’.

4 AHL and Services Australia’s enterprise agreement do not include an entitlement to end of year shutdown leave.

5 National Archives of Australia, Information Management Standard for Government [Internet], available from Information Management Standard for Australian Government | naa.gov.au [accessed 27/04/2022]

6 The additional three days annual leave at Services Australia is provided in lieu of end of year shutdown leave.

7 These four entity enterprise agreements and policies use terms such as ‘will’ and ‘must’ when describing responsibilities of employees and employers to manage annual leave balances exceeding thresholds.

8 ANAO reviewed annual leave accruals and balances from 1 July 2020 to 31 October 2021.

9 MDBA’s enterprise agreements does not include a prior approval requirement for purchased leave.

10 The ANAO did not undertake systems control testing for six entities (ACIC, AHL, CER, DISER, Finance and MDBA).

11 Percentages are calculated using the total number of employees purchasing or taking leave at each entity between 1 July 2020 and 31 October 2021.

12 This arrangement is in place for employees who transferred to MDBA from the Murray-Darling Basin Commission (MDBC).

13 MDBA employees formerly employed at the Murray-Darling Basin Commission accrue leave at 6.5 working days each year.

Long service leave accrues at pro rata rates for part-time employees.

14 MDBA employees formerly employed at the Murray-Darling Basin Commission are eligible to access long service leave following seven years of qualifying service.

15 Sample sizes ranged from nine relevant transactions at AHL to 25 relevant transactions for DISER, Finance, MDBA, NDIA, NIAA and Services Australia.

16 NDIA has the requirement for supporting documentary evidence in its maternity leave fact sheet, rather than in its leave policy.

17 Sample size for Services Australia and Finance was 25 maternity leave transactions.

18 ATO does not require documentary evidence to be provided for unpaid parental leave.

19 Sample sizes ranged from five transactions at AHL to 25 transactions at Finance and Services Australia

20 Finance’s TOIL policy allows credits to be converted to annual leave or cashed out (up to five days each) annually, subject to policy requirements.